Confidence Trick

Those with an interest in the outcome of Rangers’ appeal against HMRC’s assessments in the ‘Big’ Tax Case might be justified in feeling a little confused. When the story first broke in April 2010, Alastair Johnston gave this statement to the media: “Tax issues are never clear-cut but all I can say is we have taken a lot of legal advice on the issue. I do not think it should be a material concern for us in the longer term but we can’t say for sure yet what might happen.”

Between breaths of fire and vitriol directed at former Rangers directors after Mark Daly’s recent BBC Scotland documentary, Craig Whyte said: “At this point the club’s advice from tax advisors has been that the club has a good chance of succeeding in the tribunal but it would be wholly irresponsible not to consider the potential consequences for the club should the decision be made against us”.

Yet an array of tax professionals say that if Rangers provided its players with side contracts assuring them that loans taken from an Employee Benefit Trust (EBT) would not have to be repaid, then the club’s chances of succeeding in appealing the assessments in their possession would be very slim.

Opinions- it is (famously) all about opinions. One opinion probably matters more than most. It is that of Andrew Thornhill QC, Rangers’ Counsel in the EBT case. He seems to be a little less bullish than Johnston and Whyte. In correspondence with their legal expert, Rangers received more nuanced advice. The following is an excerpt from internal Rangers communications prepared to inform Whyte about a range of matters:

No one would expect a lawyer to tell his client that a favourable outcome is guaranteed. Even this blog has always gone to pains to point out that there is no such thing as certainty in court cases. (Although Rangers may be destined to prove the old saw “the only sure things in life are death and taxes” correct on both counts). However, I would have expected more uplifting advice to have been communicated internally to justify the optimistic pronouncements from Ibrox.

This advice is tantamount to saying “there is definitely a possibility of winning the case”. I would agree! It is logically equivalent to “there is a non-zero probability of winning our case”.

Of course, the case is a bit more complicated than just Rangers versus HMRC. As we have covered previously, the case involving the Murray Group Management Limited Remuneration Trust goes beyond just Rangers: it deals with several current and former subsidiaries of Murray International Holdings Ltd. Each subsidiary is legally responsible for paying its own employment taxes and each will be held individually liable for any negative outcome from the case. Yet not all of the subsidiaries will have been guilty of the same scam as Rangers.

Those who have been reading all of the posts and replies on this blog (a monumental task these days) will understand that any cash that Sir David Murray withdrew from the trust might well be deemed to be a legal loan. As Chairman, majority shareholder, and in effective control of MIH through most of the years in question, he would have had little reason to write himself a side letter saying that he did not need to repay any loans. If this is what he has done, then he will likely have been within the operating limits established in the Dextra case. So anyone seeking to provide ambiguous advice to a prospective buyer of Rangers FC might well point to grounds for optimism on aspects of the case involving the Murray Group Management Limited Remuneration Trust. (I look forward to comment on this point from our unpaid team of legal experts!) Yet, those familiar with the case cannot conceive of a possible defence in Rangers’ case. (Assuming that the club did indeed provide side-letters to players).

Is Thornhill speaking only to the Rangers case? Was a sunny-side-up opinion procured to help smooth the sale of the club? Did Whyte decide to make his move on the basis of a seemingly optimistic legal opinion that in fact says nothing at all? Whyte’s purchase of Rangers seems to defy all logic and business experience. We have to include the possibility that he has been legally duped. Of course, the contract that sold Rangers to Whyte includes a gagging order preventing Whyte from commenting negatively on the previous owners. So we are unlikely to learn if Whyte is experiencing any buyer’s remorse.

As the quote above also points out, the resumption of the case is near at hand. Next week will see the closing stages of the case begin. The window for speculation is fast closing and real answers to the mysteries of this case will start coming thick and fast. The 8-12 week period from the conclusion of the case is realistic. The stuff about “a period to discuss the affordability of any settlement” is not. There is no stage in the formal process after the tribunal to negotiate. The bill for the underpayment & interest (about £36m) will have crystallised and would be legally enforceable. Rangers can appeal (through the MHL subsidiary of MIH) to the Upper Tribunal. HMRC do not normally enforce payment if it will result in insolvency while an appeal is underway. However, there has been a hardening of hearts recently, and in cases where it is felt that the appeals process is being abused to delay the inevitable, they will be more likely to enforce their legal right to demand payment shortly after the First Tier Tribunal (Tax). HMRC can elect to do a deal at any time of their choosing. However, a pennies on the pound settlement in the wake of recent publicity seems unlikely. Public punishment of a Draconian nature might do more to fill the public treasury than any smattering of repayment which Rangers could muster.

The question remains whether Whyte can keep Rangers solvent long enough to divert blame for the disaster that is almost certainly about to befall Rangers. A post-Big Tax Case fall will be so transparently the work of the previous management and owner that Whyte will not need to comment. Falling earlier will leave Whyte with a lot of responsibility for Rangers’ problems, and he will not be able to openly throw any mud in the direction of the real culprit: Sir David Murray.

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About rangerstaxcaseI have information on Rangers' tax case, and I will use this blog to provide the details of what Rangers FC have done, why it was illegal, and what the implications for what was (updated) one of the largest football clubs in Britain.

Please forgive the spelling on the link but over on CQN I have posed a few questions about Rule compliance– as opposed to tax and accounts. Anyone want a look you can find them here– and as I say I hit send before spell checking so forgive the occasional howler as I was in a hurry and demented by my daughter at the time.

Sorry Adam but you’re wrong. This blog, as good as it is, didn’t invent reasoned internet debate. As a long time member of KDS and viewer of CQN there have frequently been rangers fans posting and treated with respect providing they are not on to troll and can provide reasoned debate. Would it surprise you that many of the posters on this blog are long time members of the aforementioned sites?

Your falling into the Graham Spiers internet snobbery territory where anyone who posts on a internet message is assumed to be some kind of sectarian psycho.

=================================

I believe that Onx3 has told us he is a Rangers supporter. No histrionics from him, no huge reaction from anyone.

ger1888 says:
08/11/2011 at 10:57 pm
We need a wee titbit of salacious news from up the marble
staircase RTC. Things are getting a wee bit tetchy on here, with
once again poor Adam in the gunsights of most of the barbed
comments.
~~~~~~~~~~~~~~~~~~~
Adam is a whale??? Why does nobody tell me this stuff? Do you even get blue-nose whales?

ger1888 says:
08/11/2011 at 10:57 pm
We need a wee titbit of salacious news from up the marble
staircase RTC. Things are getting a wee bit tetchy on here, with
once again poor Adam in the gunsights of most of the barbed
comments.
~~~~~~~~~~~~~~~~~~~
Adam is a whale??? Why does nobody tell me this stuff? Do you even get blue-nose whales?
😀

It’s interesting that Adam gets all the ‘attention’ while Onandx3 doesn’t seem to have had any since he fessed up. The way I see it, Onandx3 is MON (quietly going about his business) to Adam’s NL (more vocal/confrontational).

It’s interesting that Adam gets all the ‘attention’ while Onandx3 doesn’t seem to have had any since he fessed up. The way I see it, Onandx3 is MON (quietly going about his business) to Adam’s NL (more vocal/confrontational).

We are all NL.

Except Onandx3, obviously.

===================================================

The bloke didn’t “fess up” he just declared his allegiances without making any big deal about it. He continued to post well thought out informative material and interact with like minded folk who wanted to do the same and discuss issues which were serious in the context of Rangers future and Scottish football. Particularly how what happened to Rangers may have wider ramifications.

Hugh McEwan says:
08/11/2011 at 11:28 pm
~~~~~~~~~~~~~~~~~~~
Fair point about Onandx3. I was simply trying to illustrate that some posters seem to continually attack Adam for attacks sake. He is a focal point, just as NL is for those who constantly rage at him. Adam isn’t perfect, but he’s been a valuable contributor throughout and this site would be all the poorer without his input.

Its time all posters/SPL referees declare their team allegiance..i think I read this somewhere.

My name is Mark I am a Celtic supporter (for a while at least)
If I was a referee I would burn in hell before Lafferty would last 90 minutes gain a penalty or leave the park without a pair of referees fingers needing to be surgically removed from his flaring nostrils.
That is why I am not a referee nor living in Scotland any longer, Ireland is my home and at home I feel. And to support my comments re not supporting my club financially, I spent more on one trip to CP last year than most would in two years ST’s.

gunnerb says:
08/11/2011 at 11:34 pm
Lord Wobbly says:
08/11/2011 at 11:21 pm
It’s interesting that Adam gets all the ‘attention’ while Onandx3
doesn’t seem to have had any since he fessed up.
_____________________________________________________________________
Its time all posters/SPL referees declare their team allegiance..i
think I read this somewhere.
~~~~~~~~~~~~~~~~~~~~~
Perhaps. But wouldn’t it be great if no one felt it was necessary?

As far as the comments have been made about Mr Whyte not being a “fit and proper person” to be a director, the only arguable ground, at least at face value, is that of having been disqualified as a company director in the last five years. However that means that the decision to disqualify took place in that five years, not that he was serving his ban during it.
*********************************************************************************************************************
Paul, this interpretation of this 5-year rule doesn’t sit well with me. Although I understand you interpret to mean that the disqualification date must have taken place in the past five years, my interpretation is that the disqualification itself (regardless of when served) has been active in the past 5 years.

Using MBB as an example; say he was banned for 15 years (as opposed to the seven) in 2000; clearly the date of disqualification is outwith the 5-year rule, although his ban would run until 2015. Applying your interpretation, MBB fulfils the ‘fit and proper’ test even though still disqualification is still live.

RFC complain about LM having acted in a conflict of interest by acting for Bain against them.
The legislation provides for an assessment of the complaint’s eligibility. This is to see whether it merits being investigated, or whether it gets summarily kicked out and put in the green crayon pile.
The assessment of eligibility is carried out by the Scottish Legal Complaints Commission (SLCC).
RFC’s company secretary, Mr Withey, an English solicitor sends the SLCC (allegedly) a miseading and selective bundle of the correspondence, and in particular omits the key rebuttal from LM which sets out that they expressly sought and were given advance clearance by Bruce Ritchie, the Law Society’s director of professional practice and the oracle on these matters.
SLCC, without reference to LM, decide the complaint is eligible and send it off for full blown investigation.
LM, incandescent with rage at this, exercise their right to appeal the eligibility decision to the Inner House of the Court of Session. That’s three senior judges. Very scary. Quite expensive. Major raising of the stakes.
Rangers get service of the appeal. All things being equal you would expect them to come in to oppose it, to defend the SLCC decision and to maintain that they are entitled to have it investigated. They do not do anything and the time for them to lodge answers expires.
SLCC do lodge answers to defend their decision.
On the eve of a scheduled hearing to determine whether the appeal should be given leave to proceed SLCC roll over and concede the point.

Conclusions:

1. Rangers are either too skint to come in or alternatively know they’ve been rumbled and are now trying to stay out of it.
2. SLCC accept they may have cocked it up, or at least that it is eminently arguable that they have.

Aye and we’re talking about a man who signed judas ,not to break a 100 year old sectarian employment policy but to f@ck over Celtic.
——————————————————–

For what it’s worth the deal with Le Petit Merde foundered when McMurdo found out what he had done. LPM agreed a £1.8m deal with Celtic, 600k to Nantes, 600K signing on fee and a 3 year deal at £200k pa. McMurdo asked LPM who was paying his cut to which he obviously had no answer. Celtic refused to pay McMurdo and he then offered him to Rangers. At the end of season player of the year dinner (after the Scottish Cup Final I think) LPM confirmed to a friend of mine (who played for Celtic at the time) that he would be signing for Rangers on the 5th July. I just wish I betted then. So yes Murray did sign him as a “get it up you” to Celtic but we were also being held to ransom by McMurdo at the time. Speaks volumes about LPM though.

I have only one warning for Celtic fans, don’t underestimate the absentee landlord. It will not surprise me in the least when he leads the charge to save rangers and gift them the title and a clear passage to the CL.

Adam says:
08/11/2011 at 10:30 pm
“In 1994 the Bank of Scotland was quite prepared to pull the plug on Celtic for its £7 million. The bank executives regularly wined and dined at Ibrox and were close friends of Murray. I believe both parties shared the same ludge.”

They were so close to David Murray in 1994 that we didnt even bank with them
—————————————————————————
Sorry to poop on your post Adam. You’re then bankers RBS were desperate to get rid of the account at that time. BofS. for some strange reason, were happy to get it. You can make of that what you like, but it’s the truth.

cheers PW thats braw.
So CW and his cronies are playing silly buggers with the law society of Scotland to huh? he likes takin the piss doesn’t he?
he seems to…enjoy it, he’s pathological with anything that has “rules”
More reason if needed for the SFA to say no to a scottish version but skint version of Valdimir Romanov
we don’t need another friggin eejit in charge of those nutters

Another OA enters the fray says:
08/11/2011 at 11:54 pm
———————————————————
But in your example, if the person is still disqualified from being a director, then they are not legally capable of getting to the “fit and proper person” test.

My understanding of the interpretation of the clause (and as I always say I am willing to be enlightened and educated) is that a person disqualified for the maximum period – 15 years – could become a director of a football club, as a fit and proper person, the day after his disqualification expired.

This of course would depend on him not falling foul of the other provisions.

If however a director received a one year disqualification, he would still be barred from being a director of a football club for four years after the ban ended. That might seem unfair, and therefore, in the same way as I suggested a post-insolvency Mr Whyte might do, our fictitious director could ask the football authorities to be approved, whilst explaining, I would assume, that a 1 year ban would clearly be only for “technicality”. It would be up to the football authorities to agree or disagree.

I have only one warning for Celtic fans, don’t underestimate the absentee landlord. It will not surprise me in the least when he leads the charge to save rangers and gift them the title and a clear passage to the CL.

Of this I have no doubt.

OK I’ll bite
an opinion based on what please expand facts if you have any?

I have only one warning for Celtic fans, don’t underestimate the absentee landlord. It will not surprise me in the least when he leads the charge to save rangers and gift them the title and a clear passage to the CL.

Of this I have no doubt.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

To those who say that rangers may or may not have won titles regardless of the ebt’s.

Ben johnson may or may not have won the olympic 100metre title regardless of steroids.

The point is he cheated and was stripped of his title, and rightly vilified for all time.

There is no middle ground here, if rangers win the tax case then there are no issues to address. If they lose then they have cheated, if they have cheated then all trophies won during this period should be stripped from them. If losing the tax case results in insolvency then a newco should apply for a liscence, and if successful join the 3rd division.

Anything less will leave the scottish game without integrity, and morally and financially bankrupt.

Hugh McEwan says:
08/11/2011 at 11:28 pm
~~~~~~~~~~~~~~~~~~~
Fair point about Onandx3. I was simply trying to illustrate that some posters seem to continually attack Adam for attacks sake. He is a focal point, just as NL is for those who constantly rage at him. Adam isn’t perfect, but he’s been a valuable contributor throughout and this site would be all the poorer without his input.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

I don’t believe attack is the correct term…debate..discuss..argue..yes..but attack him?…unless I’ve missed some posts Adam is fair and objective…his opinion may seem at odds or overly defensive of a particular element of discussion…bordering on pendantic..but always seems to be fairly robust in his presentation of details…

To be fair he always fights his corner whatever that might be and has been known to accept a position that paints the rangers postion for what it appears…even in the face of over whelming numbers…and does so with a degree of humour at times..

I’ve always maintained Rab…we are not looking for Rangers to be unfairly punished…or spitefully punished…just for the punishment that the rules dictate be applied..

The question is..what are the options/punishments open to the SPL/SFA if;

1. They fall into administration?
2. They are liquidated and they form a newco and apply for a licence?

1. If the rules state it is simply a 10 point penalty…so be it!
2. If the rules state a new licence can be granted and they should be given entry into division 3..then again fine.

If however there is a provision that grants a newco an immediate re-entry to the SPL on the back of a liquadated team then we have a problem..

The new co would need to start on zero points..the newco would have european exclusions applied…etc etc..

However…would all SPL clubs vote the newco in?…the clubs most likely to consider voting against them…those facing relegation…Aberdeen..Inverness…Hibs…denying a newco entry would stave off relegation for this season for those clubs…it would also prevent relegation for each of the SFL divisions…with only promotion required…whilst the newco would I’m sure be back in the SPL in 3 seasons..whilst the lower division clubs in each division benefit from increased revenue from matches against the newco..

I for one see that as the path that should be taken…re-entry to the SPL is just plain wrong!

My view is simply that Adam’s manner of posting, whilst in the main informative, well thought out and a very welcome addition to this blog (much like Onandx3’s), can sometimes become very annoying (much unlike Onandx3’s).

I can understand to a degree why you might think along these lines Stevie, however there are an increasing number of commentators on RTC’s blog and to limit the possibility of sensible debate on an arbitrary number of posts might see us lose some wee (or not so wee) gems along the way. Witness, for example, the fairly recent link posted by BRTH to his posting on CQN, which gives an excellent analysis of the SPL rules regarding the appropriate penalties for Insolvency Events/liquidation or whatever. Given the amount of speculation and debate over the likely consequences for Rangers should such an event arise, it’s quite definitely worthwhile for us to see what powers there are open to the governing bodies that might/should define the response of the SPL. Better to analyse these things at leisure than have knee-jerk reactions to what we as fans should do if the closed doors, nod and a wink, business as usual decisions are reached by the other SPL member clubs as Phil MCGB has suggested.

H says:
09/11/2011 at 4:23 am (Edit)
_____________________________
Yes- Adam might be a little annoying at times, but as I think you are saying, he more than compensates for style with content. I welcome the challenge to the sacred truths that many hold dear on account of inhabiting the incestuous world of football messageboards. We will all only read opinions that are at most a refinement of our own. That cannot be healthy.

I like the fact that Adam and Onandx3 provide an intelligent presentation of the other side of fence. I wish I had more time to engage them in debate. They are more than worthy adversaries.

I would like to think that many Rangers fans have become aware of the facts of what is going on in their club through these debates. If it was only a Celtic-focused rant on here, few would read.

StevieBC says:
09/11/2011 at 1:58 am
~~~~~~~~~~~~~~~~~~
Disagree, although I understand what you are trying to say. But (cliché alert) at the end of the day, RTC should post a new thread only when good and ready, not when you become fed up with reading other peoples musings. If you don’t want to read beyond 300 comments then don’t. Simply pop your head around the door every so often until a new thread appears.

So, good morning from a dreech and cold Moscow. First time in Russia, but I can now say I have accomplished what netiher Napoleon nor Hitler did.

Re Phil Mac’s suggestions that there is already acceptance that Rangers can take 10points, Keep Calm and Carry On.
– I wonder if this was what we were all missing with Whyte’s takeover? Maybe the discussions were had prior to his buying Poundland for, er, a pound. He knew he could renege on all those debts, suffer a 1 year, 10pt penalty, and start with a clean slate (though a hell of a lot of irate suppliers). He will be hailed has the man who saved the unmentionables. Murray couldn’t do it – he would have been personally liable perhaps? But new broom comes in, tidies the mess, -10pts, thank you very much.

Given the rules about the majority voting in the SPL could Celtic veto anything even if they wanted to? What galls me is that they are a “special case”. Where were these interpretations when WE were about to go bust? Whilst Reid stated – “we’ll no longer accept being treated as less than anyone else” he forgot to say and “we won’t accept anyone being treated as more than anyone else”.

jockybhoy says:
09/11/2011 at 7:44 am
So, good morning from a dreech and cold Moscow. First time in
Russia, but I can now say I have accomplished what netiher
Napoleon nor Hitler did.
~~~~~~~~~~~~~~~~~~~~
I’d imagine that had you attempted to raise and send an army to conquer Russia, you may well have encountered resistance and found yourself freezing to a halt during the Russian winter, much like your predecessors. Why does nobody ever try to invade at the start of spring?

Hugh / RTC
Football m/boards are tribal, this is something of a hybrid.
The site gets slated by one group for being a place where Celtic supporters indulge thier dreams of the demise of Rangers through lies, fantasy and 1% of truth.

Most of the Celtic supporters on here will from time to time indulge to varing degrees as will Rangers supporters who are presented with bait.
The bait maybe something trivial, jocular or serious but between the 2 groups and if RTC can stop it he´s in the wrong job !

It´s no surprise then that many of the what I would consider the better/more interesting contributors aren´t from the main rump of Celtic supporters.

When people like Paulie Walnuts, easyjambo, Onx3, RTC and BRTH post you tend to pay more attention.

Lord Wobbly says:
09/11/2011 at 7:59 am
jockybhoy says:
09/11/2011 at 7:44 am
So, good morning from a dreech and cold Moscow. First time in
Russia, but I can now say I have accomplished what netiher
Napoleon nor Hitler did.
~~~~~~~~~~~~~~~~~~~~
I’d imagine that had you attempted to raise and send an army to conquer Russia, you may well have encountered resistance and found yourself freezing to a halt during the Russian winter, much like your predecessors. Why does nobody ever try to invade at the start of spring?
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Because during the Spring thaw, the roads are seas of mud.

There is no middle ground here, if rangers win the tax case then there are no issues to address. If they lose then they have cheated, if they have cheated then all trophies won during this period should be stripped from them. If losing the tax case results in insolvency then a newco should apply for a liscence, and if successful join the 3rd division.
.
——–

Hmm, not sure on this. If they win the tax case, they have to lose the “sporting” case. For them to win the tax case they must show that the EBT payments were not contractual. The SPL rules clearly state that players can only be paid according to the terms of their contract. (See earlier post)

If they win the “sporting case”, they can’t possibly win the tax case. This would mean that they payments were contractual, so legal under SPL rules, but it would be an admission that they are guilty regarding the tax.

Even without the tax case there must be action taken for the massive rule breaches Rangers have clearly been guilty of over the years….